XXI. MEZINÁRODNÍ KOLOKVIUM O REGIONÁLNÍCH VĚDÁCH. SBORNÍK
PŘÍSPĚVKŮ.
21ST
INTERNATIONAL COLLOQUIUM ON REGIONAL SCIENCES.
CONFERENCE PROCEEDINGS
Place: Kurdějov (Czech Republic)
June 13-15, 2018
Publisher: Masarykova univerzita, Brno
Edited by:
Viktorie KLÍMOVÁ
Vladimír ŽÍTEK
(Masarykova univerzita / Masaryk University, Czech Republic)
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AUTOR, A. Název článku. In Klímová, V., Žítek, V. (eds.) XXI. mezinárodní kolokvium
o regionálních vědách. Sborník příspěvků. Brno: Masarykova univerzita, 2018. s. 1–5.
ISBN 978-80-210-8969-3.
AUTHOR, A. Title of paper. In Klímová, V., Žítek, V. (eds.) 21st
International Colloquium
on Regional Sciences. Conference Proceedings. Brno: Masarykova univerzita, 2018. pp. 1–
5. ISBN 978-80-210-8969-3.
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DOI: 10.5817/CZ.MUNI.P210-8970-2018-18
STARTUPS SUPPORT IN SLOVAK REPUBLIC
Podpora startupov v Slovenskej republike
JARMILA HUDÁKOVÁ
Ústav ekonomiky a manažmentu
Fakulta prírodných vied
Univerzita Konštantína Filozofa v Nitre
Institute of Economics and management
Faculty of Natural Sciences
Constantine the Philosopher University in Nitra
 Tr. Andreja Hlinku 1, 949 74 Nitra, Slovak Republic
E-mail: jhudakova@ukf.sk
Annotation
In a knowledge-based society, innovation is the driving force of the economy on all levels and in all types of
organizations. Due to high risks present when introducing new products and services, innovations are usually
commercialized via isolated formal formations such as startup companies (next, just startup). The aim of the
article is to empirically analyse the situation of startups in Slovakia and describe how Slovak republic supports
startup. We used the questionnaire and we approached 289 small and medium enterprises, in case of which we
assumed that they are startups. This assumption confirmed 153 startups based on the returned questionnaires.
Slovak Republic has all that is necessary for the startup ecosystem. The survey showed that there is a need to
support women in business and activate more investors interested in investments in startups. Founders of startup
still use mainly own savings for funding business. Our findings can inspire new investors. Results may increase
investors’ interest in investing in startup companies due to the fact that the Slovak Republic conditions are created
for this type of business.
Key words
innovations, startup, the simplified joint stock company, ecosystem
Anotácia
V spoločnosti založenej na vedomostiach sú inovácie hybnou silou hospodárstva na všetkých úrovniach a vo
všetkých typoch organizácií. Vzhľadom na vysoké riziká pri zavádzaní nových produktov a služieb, sa inovácie
zvyčajne uvádzajú na trh prostredníctvom samostatných inovatívnych spoločností (ďalej len startupov). Cieľom
článku je empiricky analyzovať situáciu startupov na Slovensku a popísať, ako Slovenská republika podporuje
podnikanie startupov. Pri získavaní empirických údajov sme použili dotazník a oslovili sme 289 malých
a stredných podnikov, o ktorých sme predpokladali, že ide o začínajúce podniky. Tento predpoklad potvrdilo 153
startupov na základe vrátených dotazníkov. Slovenská republika má všetky predpoklady pre ekosystém startupov.
Prieskum ukázal, že je potrebné podporovať ženy v podnikaní a aktivovať viac investorov, ktorí majú záujem
o investície v startupoch. Zakladatelia startupov stále využívajú hlavne vlastné úspory pri financovaní
podnikania. Naše zistenia môžu inšpirovať investorov. Výsledky môžu zvýšiť záujem investorov o investovanie do
startupov, pretože pre tento typ podnikania sú vytvorené vhodné podmienky v rámci Slovenskej republiky.
Kľúčové slová
inovácie, startup, jednoduchá akciová spoločnosť, ekosystém
JEL classification: D21, D23, L26
1. Introduction
At the very beginning, let us define when a new company is considered to be a startup business. Blank (2010)
says that start-ups do not form a small version of a large company and operate otherwise than classical small
enterprises since their beginnings and internal operation is different. Thanedar (2012) distinguishes startups from
small enterprises based on five criteria such as: profitability, long-term value, income, growth potential and
scalability.
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However, no unified or generally valid definition of startup exists. It is possible to identify the common aspect
though that is present in these definitions. Startups do not have to operate exclusively in the IT field and develop
and apply high technology. Startups are established with the aim to create an innovative product or service.
Innovation is their main competitive advantage. The unique context in which startups begin, is characterised by
novelty, small size and uncertainty. Novelty according to Zäch and Bardegger (2017) in startups is shown mainly
as a lack of experience of all employees. Small size is perceived as limited base of financial and human resources.
According to Ries (2011) the above mentioned uncertainty involves, apart from uncertain success, also the heading
of startups towards higher goals, which may not be realistic.
The growth criterion as crucial in start-up definition is emphasised by several authors. Damodaran (2009) states
the value of startup consists exclusively in its future growth potential. Graham (2012) also emphasises the growth
criterion and designates a startup as an enterprise created for fast growth.
There are many opinions on what is and what is not a startup; these opinions differ from one another depending
on the author of the definition, the country and the purpose that the definition is created for.
Apart from the question that which newly established company is considered to be a start-up, it is necessary to
handle the discrepancy of until when a startup may be considered to be a startup. According to Blank and Dorf
(2012), the main goal of a startup is not further stay a startup but to succeed and become an organisation or on the
contrary, not to succeed and seek other market opportunities. In the USA, there is a limit defined where the startup
changes into a standard enterprise and it as follows: turnover of USD 50 million for the last 12 months, number
of employees 100 and more and the value of enterprise more than USD 500 million. However, under the
circumstances of Slovakia this criterion may not be applied. There are other criteria though, e.g. takeover by a
bigger company (acquisition) or time criterion. The most commonly used border seems to be the expiration of
three years as of the startup establishment.
Startups do not work as isolated firms but belong to the ecosystem (Fig. 1). A startup ecosystem is formed by
people, startups in their various stages and various types of organizations in a location (physical and/or virtual),
interacting as a system to create new startup companies. These organizations can be further divided into
categories: universities, funding organizations, support organizations (like incubators, accelerators, co-working
spaces etc.), research organizations, service provider organizations (like legal, financial services etc.) and large
corporations. Different organizations typically focus on specific parts of the ecosystem function and/or startups at
their specific development stage(s).
Fig. 1: Startup Ecosystem
Source: Startup Commons
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2. Research Methods
In the first step, we analysed conditions for startups in Slovakia. The second step was to conduct research.
The basic set of surveyed enterprises was defined by:
 The basic condition was that the business is a startup
 Territorial point of view – the company has its registered office in the Slovak Republic
 Dimensional aspect – enterprises with fewer than 50 employees.
A quota selection method has been applied. Quoted variables have been selected as above variables. Two sources
of information were used for the empirical survey:
 Publicly published information
 Information from the crowdfunding webs
 Information from corporate websites
 Questionnaire survey information
With respect to the fact that we were only interested in business that are startups their list, we have acquired from
two Slovak crowdfunding sites: startitup and startupers. Using the questionnaire, we approached 289 small and
medium enterprises, in case of which we assumed that they are startups. The questionnaire was distributed by
mail. This assumption confirmed 153 startups based on the returned questionnaires. In the questionnaire we asked
whether the founder is male or female, and what is his/her highest achieved education. Further we asked in which
stage the startup is in, from what resources it is financed and what are its priorities for the coming year.
3. Research Results
3.1 Conditions for startups in Slovak republic
The specifics of startups in comparison with traditional starting companies under the circumstances of the Slovak
Republic according Hošták (2015) may be summarised as follows:
 The company was established for the purpose of creating an innovative product or service, and less than 36
months lapsed as of its establishment (time aspect does not have to be considered). Innovation is their main
competitive advantage.
 It is a micro, small or medium enterprise.
 It is characterised by that fact that the majority of voting rights belong to natural persons, who are their
founders.
 After market entry fast growth is expected.
 A scalable business model is applied.
 It has international ambitions.
Business innovations can hinder external and internal barriers that slow down innovation activities or otherwise
negatively affect them. These barriers can lead to the failure to start innovative projects to cancel them during
implementation or to delay the introduction of innovations. In particular, there are barriers economic, market,
knowledge and other reasons not to invest (Klímová, Winklerová, 2017)
Therefore the Ministry of Finance of the Slovak Republic (2015) drew up measures for supporting the business of
beginning startups. The summary of startup support measures was as follows:
1. Simplified joint stock company
2. Exemption from the obligation of tax licence payment
3. Changes in making a security deposit upon voluntary VAT payer registration
4. Granting visas to start-ups from countries outside the EU (“startup visas”)
5. Establishment of the National Business Centre
6. Creating a platform of angel investors
7. Provision of grant for students with innovative thinking prior to company establishment
8. Forming grant schemes for making the infrastructure of higher education institutions available to start-ups
9. Building the institutional capacity of higher education institutions for transfer of knowledge into practice
10. Support of quality education in the field of financial literacy at basic and secondary schools
11. Involvement in international programs stimulating cooperation of higher education institutions with the
private sector
12. Creating a centre of excellence for information security
13. Regular meetings of the working group of the Visegrad Four in reference to the issue of start-ups and
innovations
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14. Creating a position for the permanent representative of the Slovak Republic from Silicon Valley
15. Incentives for angel investors
16. Improvement of capital financing for start-ups via the structure of Slovak Investment Holding
17. Introduction of new financial tools for start-ups within the National Business Centre
18. Improved support of start-ups and other small and medium enterprises in access to financing options in
Europe
The adopted amendment of Act No. 513/1991 Coll., Commercial Code, as amended as a whole deals only with
one topic being the introduction of a new legal business form, namely a simplified joint stock company. The
amendment of the Commercial Code came into force as of 1 January 2017 and since that date it is possible in
Slovakia, apart from the four current business companies (public limited company, limited partnership, limited
liability company, joint stock company), it is also possible to establish a fifth one - a simplified joint stock
company. The new sixth head of the Commercial Code is devoted to it within the framework of business
companies. Such a company may use after its business name the addendum “simplified joint stock company” or
the abbreviation “j.a.s.”. For violation of their liabilities, the simplified joint stock company will be liable with all
its properties, but the shareholder will not be liable for the liabilities of the company at all.
The simplified joint stock company is a suitable form of business for beginning projects offering new or
significantly innovated products, i.e. startups. The establishment of a simplified stock company is not limited
in any way or tied to a startup project. It may be established even by any other entrepreneurs with any scope of
business. The simplified joint stock company combines the features of a limited liability and joint stock company.
From a limited liability company, for the founders of a simplified joint stock company simple organisation
structure and low-input capital is taken over. From the joint stock company, the advantages for investors
(shareholders) are taken over into the simplified joint stock company, which enable them efficient entry,
retention and outcome from the investment. The relations of founders and investors may be regulated using
different flexible institutes.
The simplified joint stock company may be established by one or more natural or legal persons. The value of
minimum basic capital for a simplified joint stock company is EUR 1. The basic capital of the simplified joint
stock company will be distributed to the actual number of shares with a certain nominal value. The nominal value
of the share may be expressed in Euro cents or by combination of Euro and Euro cents. Prior to establishment of
the company, the entire value of the basic capital must be subscribed and all capital contributions must be paid up.
The condition for establishment of a simplified joint stock company is that it may not be established based on a
public offer for the acquisition of shares, which means that its entire basic capital must be paid up by its founders
upon establishment. Equally it is not possible to increase the basic capital of a simplified joint stock company
based on a public offer for the acquisition of shares even during the course of its operation. A simplified
joint stock company is not a public company.
The possibility to establish a simplified joint stock company has been available in Slovakia since 1 January 2017
and during this year, according to the Commercial Register, only 58 such companies were established. Table 1
shows the establishment and cancellation of all capital companies for the period from 2012 to 2017.
Tab. 1: Establishment and cancellation of capital companies from 2012 to 2017
Capital Companies 2012 2013 2014 2015 2016 2017
Establishment 21112 28764 14953 13807 19466 21673
Cancellation 5067 5230 7464 9233 9237 9746
Simple company on stock – establishment - - - - - 58
Source: Commercial register of Slovak Republic
Many beginning startups have visions and ideas. If a startup does not find a customer whose needs would satisfy
and cannot make a profit, it no longer exists. Some of them, however, have achieved such a success that today
they are considered renowned companies with top-notch and useful services or high-quality technological
products. Figure 2 shows the 15 biggest companies in Slovakia according to revenues, which began as startup.
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Fig. 2: 15 biggest companies in Slovakia which began as startup (according revenues in mil. €)
Source: portal Finstat
3.2 Research results of startups
Our survey showed that out of the 153 start-ups, 133 were established by founders with university degree, which
represents an 86.9% share. Out of the 133 founders, 81 of them had a university degree in the field of IT, i.e. it is
a 52.9% share. Managerial and economic education was present in case of 45 founders, which represents a 29.4%
share and 27 founds had a university degree in other fields. 82.4% of the founders of the approached startups were
male and 17.6% were female.
To the question what resources do you finance your startup from, 98 companies responded that they used their
own resources (savings). It is the highest share amounting to 64.1%. It is followed by financing with the help of
family and friends - 17 answers, 11.1%. The next place belongs to crowdfunding - 12 answers, 7.8% share. It is
followed by business angels with 8 answers, 5.3%. 6 answers were in each of the last three groups, namely funds,
banks and others. Each group has a 3.9% share.
The answers to the question in which stage your startup is in now, were as follows:
Tab. 2: Stage of startup
Stage of stratup Percentage
Concept/idea 3%
Prototype 39%
Initial revenues 31%
Growing revenues 20%
Expansion to new markets 7%
Maturity 0%
Source: own elaboration
79% of the companies responded that their priority for next year is increase of sale 68% of companies stated as
priority also development of their product.
The main goal of creating a startup is to offer a product based on innovation with high added value. Statistics show
that in more than 90% of cases startups fail because they do not estimate the market potential correctly, customers
are not interested in their product or the start-up does not know how to sell it.
Conclusion
Slovakia has all that is necessary for the startup ecosystem. Simpler establishment of companies was introduced
in the form of the already mentioned simplified joint stock company. Start-ups may voluntarily register for VAT.
327
42,5 38
13,8 12,9 11,4 10,7 6,9 6,6 4,3 3,8 2,7 1,7 1 0,4
404
78
42 17,8 18,9 14 7,1 9,2 8,4 5,8 4,8 7,1 3,5 2,3 0,1
0
50
100
150
200
250
300
350
400
450
2015
2016
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Furthermore, tax licences for companies within three years as of establishment were cancelled, or the cooperation
of higher education institutions and companies was improved. Despite this fact, further development of the system
is important. The survey showed that there is a need to support women in business, because only 17.6% were
female and activate more investors interested in investments in startups. The results shows, that up to 64% of
startups using their own resources which is very expensive for them. Information should be improved not only
among startup entrepreneurs but also among investors. Many investors, if they see that the startup is still nonprofit,
are afraid to invest in it. Startup must show growth and development then it tends to be profitable in the
future. In this sense, funding could be better developed in the form of business angels, crowdfunding and others.
Literature
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